DIVISION II

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

WENDELL L.GRIFFEN, JUDGE

CA00-719

May 23, 2001

DAVID P. BROWN, M.D. and AN APPEAL FROM POLK

MELISSA A. BROWN COUNTY CIRCUIT COURT

APPELLANTS [CIV98-6]

V. HON. GAYLE K. FORD, JUDGE

MARGARET VARNER

APPELLEE AFFIRMED

David P. and Melissa A. Brown appeal a judgment entered against them and in favor of appellee, Margaret Varner, for $20,000 in damages for breach of a real estate lease, plus pre-judgment interest of $1,010.56, attorney fees of $2,000, and court costs of $430. They specifically challenge the trial court's finding that there was no evidence to support appellants' allegation that Varner failed to mitigate her damages resulting from appellants' breach of contract. Thus, appellants' argue that the court's findings were clearly erroneous. A review of the record, applicable law and the arguments presented by counsel demonstrates that the trial court's finding was not clearly erroneous. Therefore, we affirm.

Factual and Procedural History

The parties entered into a three-year leasing agreement that began on April 20, 1996, and was scheduled to end on April 19, 1999. On August 20, 1997, appellants vacated the space, effectively breaching the lease agreement. As a result, appellee placed a sign in thewindow and ran an advertisement in a local newspaper.

The lease agreement, which included an option to purchase, was prepared by Pattie Oates, a real estate broker operating under the name of Vision Realty. Oates was listed as the managing agent in the contract and was responsible for leasing the property for appellee, as well as collecting and disbursing the monthly rents. At trial, appellee testified that she began to experience difficulty in the Spring of 1997 with Oates not making deposits in a timely manner. This resulted in appellee having late payments and trouble with her mortgage company. Consequently, appellee testified that she terminated Oates' services and had two different attorneys write letters to Oates in an attempt to terminate the agreement. Oates also acknowledged at trial that she received letters from two attorneys on behalf of appellee that requested Oates to voluntarily terminate the relationship. However, Oates refused. Oates verified that the conflict between her and appellee was ongoing from early April 1997.

In April or May of 1997, appellants contacted appellee regarding problems they were experiencing with the property. Appellee contacted Oates, who requested that appellants put their complaints in writing in June 1997. Rather than provide a list of their complaints, appellants tendered a sixty-day notice of their intent to move. Appellants vacated the property on August 20, 1997. Appellee discovered that the portion of the building leased by appellants required brick and structural repairs. In addition, the building was damaged during the process of remodeling by appellants as a result of sixteen-penny nails being driven into the paneling, design board, and trim work. The side of the building was alsodamaged on June 12, 1997, due to a car accident.

As part of her case-in-chief, appellee presented the testimony of Carl Robert Wood, who testified that he saw an ad about the property in the paper and contacted appellee. Wood stated that appellee met him to discuss the property on the date he contacted her and that the parties met again the next day at the location. He testified that there was a lot of remodeling damage done to the building because sixteen-penny nails, which were normally used for structural assembly, were used for finish work. In addition, Wood observed ceiling tile damage and counter-work damage. He stated that it appeared that someone had moved the electricity, that a lot of phone wires needed to be removed, and that there was a tremendous amount of clean-up. Wood testified that he had been in the repair business for approximately twenty years and that he gave appellee an estimate of $5,823.50 to repair the property. On cross-examination, Wood stated that he did not rent the property because the facility was too large and that he did not perform any repair work on the property.

Appellee testified that she was unable to repair the damage to the building until after appellants moved. Because appellee lacked sufficient funds to make repairs, it took longer to list and show the building. Also, appellee did not use Oates or any other real estate broker to lease the property. Instead, she placed a sign in the window, ran advertisements in a weekly local newspaper approximately eight or ten times, and informed people by word of mouth. Appellee stopped trying to lease the building in January 1998, but she continued to try to sell the building by placing a "for sale" sign in the window until Spring 1998. There was a lot of initial interest due to the location of the building, however once potential lesseesobserved the damage, they expressed concern about repairs. Appellee stated that although she had a number of people calling and looking at the property, she was not successful in leasing or selling it because the potential renters could not get the building ready in time for the season and because potential renters did not like the dark paneling that appellants put on the walls. When asked why she did not go through a real estate broker, appellee replied that she knew the property better than anyone else and that the only action Oates took to initially lease the property was to place a "for rent" sign in the window. Appellee reiterated her frustration with Oates making late deposits and allowing appellants to damage the building. She testified that she did not have the money to pay someone to do the repair work and that various people helped her work on the building.

Oates testified on behalf of appellants. She stated that she initially leased the property to appellants. Oates testified that appellants contacted her about noise disruptions in June 1997. She stated that she asked them to put their complaint in writing, and they faxed her the information on June 26, 1997. At this point, Oates discussed the matter with appellee who agreed not to work on the upstairs portion of the building during appellant's office hours. Oates testified that after appellants vacated the property, appellee did not want her to re-lease or continue to manage it. She testified that she notified the Browns that appellee was not going to take any action through Oates to try to sell the property and that appellants had a right under the contract to sub-let the property by finding another tenant so long as appellee approved of the tenant. Oates admitted during cross examination that two attorneys informed her that appellee no longer wanted her services as a managing agent and asked herto voluntarily terminate the relationship.

The circuit judge, sitting as the trier of fact, entered a judgment for appellee after finding that appellee was entitled to the balance of the lease and that there was no evidence to support appellants' contention that appellee failed to attempt to mitigate her damage. From the judgment comes the instant appeal.

Standard of Review

Rule 52(a) of our Rules of Civil Procedure mandates that we will not set aside findings of fact that are based on oral or documentary evidence unless we determine that the findings are clearly erroneous after due consideration is given to the trial court's opportunity to gauge witness credibility. A finding is deemed clearly erroneous when, although there may be evidence to support it, we are left with a firm and definite belief that a mistake has occurred. See Sugarloaf Dev.Co., Inc. v. Heber Springs Sewer Improvement Dist., 34 Ark. App. 28, 805 S.W.2d 88 (1991).

Mitigation of Damages

Appellants argued below and on appeal that appellee's failure to use the services of Oates, as required by the contract, to re-lease the property constitutes overwhelming evidence that appellee failed to attempt to mitigate damages. While this argument is attractive on the surface, closer inspection renders it superficial.

Under the doctrine of avoidable consequences, a party claiming breach of contract may not recover damages that occur as a result of her failure to use reasonable care, effort, or expenditure. See Quality Truck Equip. Co. v. Layman, 51 Ark. App. 195, 912 S.W.2d 18(1995). The defendant bears the burden of proving that a plaintiff could have avoided some or all of the damages associated with the breach by using due diligence to minimize her damage and by doing nothing to increase her loss. See Quality, supra. The question of whether a party has acted reasonably in mitigating damages is a question for the trier of fact. See Quality, supra. Consequently, we will not reverse a trial court's finding that a party reasonably sought to mitigate damages unless we determine that the decision is clearly erroneous. See Grove School Dist. v. Strain, 288 Ark. 507, 707 S.W.2d 306 (1986).

In the present case, appellants argue that because appellee did not use Oates to lease the property appellee failed to mitigate her damages. However, appellants' argument is fatally flawed. The undisputed testimony at trial by appellee and Oates was that Oates originally leased the property to appellants by simply placing a "for-rent" sign in the window. Appellee not only placed a sign in the window, but also ran eight to ten advertisements in the local newspaper and spread the fact that she was seeking a renter by word of mouth. Appellee's actions significantly surpassed the action originally taken by Oates. Also, appellants failed to produce any evidence demonstrating what steps appellee should have taken other than their contention that she should have directed Oates to place the sign in the window rather than place the sign in the window herself. Appellants point to no authority or case law in support of their proposition that a party's failure to use the services of a real estate broker as contemplated by a written contract represents conclusive proof of a failure to mitigate. Instead, appellants seem to invite our court to adopt a position that would force a party to use the services of another, even when the party presentsundisputed evidence that she not only duplicated, but surpassed the services contemplated, in order to prevail on a duty to mitigate challenge. We decline appellants' invitation and affirm.

Affirmed.

Vaught and Roaf, JJ., agree.